WTO Rejects EU’s Claim It Complied With Ruling on Airbus Aid

(Bloomberg) --

The World Trade Organization on Monday said the European Union didn’t sufficiently eliminate the adverse effects of its trade-distorting subsidies to Airbus SE.

The WTO compliance ruling -- published on the Geneva-based institution’s website -- ensures that the U.S. can continue to impose retaliatory duties on European exports like French wine, Italian cheese and Scotch whiskey in response to the EU’s illegal subsidies for Airbus wide-body jets.

The dispute centers on a series of loans offered by the governments of France, Germany, Spain and the U.K. for the production of two Airbus wide-body models, the A350 and the now-discontinued A380 superjumbo.

Two months ago the WTO determined the EU’s subsidies harmed U.S. sales of Boeing Co. aircraft and authorized the U.S. to retaliate against $7.5 billion worth of EU annual exports to the U.S.

The award is the largest in WTO history -- nearly twice as large as the previous record of $4.04 billion set in 2002.

In response, Airbus said Monday the U.S. should reduce the tariffs by around $2 billion following compliance measures taken by the planemaker, and as a result of the A380 no longer being on sale.

Boeing said Airbus and the EU should turn their attention to resolving the case.

“Today’s ruling is a complete loss for Airbus and its government sponsors,” Boeing said in an email. “The EU has failed to comply with WTO rulings despite having years to do so, and billions of euros of illegal government subsidies to Airbus continue to harm the U.S. aerospace industry.”

The U.S. will consider “increasing the tariff rates and subjecting additional EU products to the tariffs,’’ the U.S. Trade Representative said in a separate statement.

Though the EU can appeal the decision, a final ruling may never be issued because the WTO appellate body will no longer have enough panelists to sign off on new cases after Dec. 10. Airbus said it would support an appeal against Monday’s report.

The EU has pledged to retaliate against against U.S. aircraft exports when the WTO rules early next year on the bloc’s dispute over U.S. subsidies to Boeing.

©2019 Bloomberg L.P.